Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Bush Proposes Aid Overhaul

The maximum Pell Grant could rise for the first time in three years and several longstanding financial aid programs could be eliminated as part of a landmark overhaul of the federal student aid system currently under consideration by Congress.

President Bush proposed the major reforms, which include a plan to raise the maximum Pell Grant from $4,050 to $4,550 over the next five years, in his fiscal year 2006 budget, which he sent to Capitol Hill last week.

Bush also called for the termination of the Perkins Loan program, which provides billions of dollars of federally-subsidized loans to low-income college students. The proposals include the abolition of several lower-profile aid programs for college-bound high school students and reductions in federal subsidies to banks and other institutions that issue student loans.

The Bush administration said that the increased Pell Grant funding, which would eliminate a $4.3 billion dollar deficit in the program, and the redistribution of funding within the student aid system would allow federal money to be disbursed more efficiently to a greater number of students.

“Problems in the structures of the current student loan programs prevent them from meeting all their policy and program objectives,” the administration’s budget proposal said. “These problems lead to unnecessary costs for taxpayers and prevent the program from achieving the efficiencies the market is designed to provide.”

The White House also backed an initiative, long advocated by congressional conservatives, to make interest rates on federal student loans variable. Such a proposal, which is strongly opposed by Democrats and student lobbying groups, would prevent students from locking in long-term low interest rates on their federal loans.

Georgetown administrators, who have lobbied for an increased maximum Pell Grant in recent years, warned that the elimination of the Perkins Loan program in the president’s budget would outweigh any benefits the university would receive from higher Pell Grant funding.

“I think that our students would be disadvantaged,” Scott Fleming (SFS ’72), university assistant the president for federal relations, said.

Georgetown maintains a Perkins Loan account, composed of university and federal money, of approximately $32 million for distribution to needy students, Fleming said. By contrast, 686 Georgetown students received just under $2 million in Pell Grants last year.

Fleming said that the proposals would face opposition from some groups in Congress that would likely push for altering many of the president’s recommendations. He also said that the overall education budget, which reduces total federal education spending by over half a billion dollars, would be unlikely to garner enough votes to pass in its current form.

“If, indeed, the Congress approves a . cut in education funding, that would be a dramatic turnaround from the increases in education funding in recent years,” Fleming said. “I don’t believe, at the end of the day . that Congress will willingly cut education funding.”

Although funding for the Pell Grant program has increased during each of the past three years, the maximum grant has remained frozen at $4,050 because of an unexpected surge in the number of students who are eligible for the grants.

The president’s proposal would also continue funding for the federal work-study program at its current level, a proposal opposed by Georgetown administrators who say that the university’s share of federal work-study funds has shrunk in recent years as other institutions’ needs have grown more rapidly than Georgetown’s.

Georgetown lost $304,000, nearly 10 percent of its total federal work-study funding, in the 2003-04 academic year.

Bush’s budget also eliminates funding for Gear Up, a federal program that aids disadvantaged middle school and high school students. Georgetown students have participated in the program by traveling to District schools and working with low-income children.

Observers have said that the budget’s proposal to also eliminate two of the federal TRIO programs geared to help needy students will face strong opposition from many in Congress.

“Taking on the TRIO advocates is like walking into a buzz saw,” Fleming said. “[But it’s] not terribly relevant to Georgetown per se .. We don’t, as an institution, have a dog in that fight.”

The budget proposal also maintains the current level of funding for National Institute of Health grants, which are heavily used by many research facilities nationwide, including Georgetown’s edical Center. The Medical Center received $66 million in NIH grant funding last year.

Bush administration officials have praised the president’s budget for consolidating several programs benefiting limited numbers of students into larger, better-funded programs, such as Pell Grants, that have a wider reach.

Department of Education Secretary Margaret Spellings said at the American Council on Education meeting Friday that the student loan changes, in particular, would focus on transferring funds used to aid students who have already graduated to students currently enrolled in college.

“This is truly a reform budget when it comes to student loans,” Spellings said. “It would direct a greater proportion of benefits toward students enrolled in school, and a smaller one toward borrowers no longer in school.”

“The budget proposes a comprehensive package of reforms to make the student loan programs more efficient, cost-effective vehicles for helping students finance their postsecondary educations,” the White House said in its budget proposal. “These savings will be used to increase the Pell Grant maximum award, pay off the current $4.3 billion Pell shortfall, and improve benefits to students..”

The Bush administration said its proposals would save $34 billion in costs over the next ten years.

University administrators said they were more favorable toward other aspects of the budget proposal, including a provision that would allow charitable rollovers of certain tax accounts, allowing alumni to donate funds to the university without tax penalties. The Office of Alumni and University Relations has estimated that $20 million in alumni donations is likely if the provision is passed into law.

Ultimately, Fleming said, the battle over various provisions of Bush’s budget proposal in Congress could create a budget that maintained the Perkins Loan program and still increased Pell Grants.

“In the politics of approving a budget, I find it highly unlikely . to think that truly, at the end of the day, you’ll see less money appropriated for education,” he said. “It comes down to a matter of, [do] these particular ways of saving money make sense in context of the benefit you get.”

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